Question for the Money Doctors

Question submitted on Jun 12, 2013.

Question

My girlfriend just sold a house that she received as an inheritance. The proceeds are 410,000 before the realtor commission. We share bank accounts and investments so my question is will it negatively affect my income and tax status because of the money from the sale? Will I be subject to income, inheritance or gift tax on any of this? What is the best way to handle this money?

Answer

Your filing status for income tax purposes is directly related to your marital status on December 31st. Since you and your girlfriend are not married, your income tax returns are filed under one of the Single Filing status options.

Therefore, the gain (if any) on the sale of house that was presumably titled in the estate or your girlfriend''s name, will not be reported by you on your individual income tax return. Your girlfriend should invest the proceeds in her own name, to avoid the gift tax implications associated with putting the funds in a joint account with you, while you are unmarried. I hope that this helps.